This is Part II of AdExchanger.com's discussion with Neal Mohan, Google's Vice President of Product Management, and Scott Spencer, Group Product Manager, regarding the official launch of the new DoubleClick Ad Exchange. Part I is here. (Today and tomorrow, we'll have reaction to the launch from across the industry.)

AdExchanger.com: What percentage of the inventory on the DoubleClick Ad Exchange is real-time bidding-enabled? Is all of it ready to go and available to advertisers in a real-time bidding system?

Mohan: All of the inventory will be available for our ad networks to be able to access through the real-time bidder.

Spencer: Google is in a unique position because we can actually enable real-time bidding to many different buyers, we have unique architecture and a footprint of technology that allows us to let many buyers use this simultaneously. Something that is fairly unique to Google’s infrastructure.

Is there anybody that RTB is not enabled for on the buy side?

Mohan: The participants on the buy side of the exchange are these large ad networks as you know. This tool has been designed for them. Our AdWords advertisers, which represent hundreds of thousands of AdWords advertisers that access that interface every single day, would simply continue to participate in AdWords and get the benefits of that new exchange inventory just simply through the AdWords interface.

Can you give me the top line on how you feel you differentiate in the exchange marketplace from other exchanges such as Yahoo!'s Right Media or Microsoft’s AdECN?

Mohan: I can’t really comment on what other players are doing in the space. We’ve really been focused heads down. We have a very large number of engineers focused on this integration between DoubleClick and Google, and that’s what we are trying to address here.

From our standpoint, we have tried to build this with as much feedback and participation from our publisher and advertiser partners as possible. The way we look at it is we really want to create a means by which we can actually grow the overall display advertising pie. In addition to making it easily available to our large DoubleClick publishers, our AdSense publishers, AdWords advertisers and ad networks, we want to develop those capabilities that make it most effective for them such as the real-time dynamic allocation on an impression by impression basis for publishers, the real-time bidding technology, the payment and clearing capability which is a complicated part of the process, and creating as much rich controls for publishers and advertisers such as - if I’m a publisher - which ad networks do I want to have participate and access my inventory, which ones I don’t, for ad networks, things like frequency capping, etc. – all those controls you need to make display advertising that much more effective.

Is a good fit for AdX 2.0 the big brand media site or the advertisers with the huge budgets? Who’s a good fit? Can you discuss the attributes?

Mohan: The way I think about it is to put it in the form of an analogy. The ad exchange is like a stock exchange. So, just like on a stock exchange, large institutional investors can participate directly – meaning large publishers, newspapers, magazines, entertainment portals, etc. – people with premium inventory. Similarly ad networks that are sophisticated in terms of their optimization and buying capabilities, those folks can participate directly as institutional investors on the stock exchange. While, also on a stock exchange, individual investors participate through things like brokerage houses which add another layer of value and so we see our AdSense and AdWords publishers and advertisers, respectively, participating [on the exchange] through AdSense and AdWords. We think the platform and the way that we’ve designed it is suitable for all of these constituents.

Let’s talk a little bit about fraud and spam. Google has worked hard on cleaning up click spam in AdSense. But, now we move to the display ad exchange environment. Given that exchanges such as Right Media Exchange have struggled with impression spam at times, what is Google planning to do about impression spam?

Spencer: What we’re doing is taking the great controls that we’ve developed for the AdWords and AdSense system for ad quality and inventory quality and we are extending those to operate on the ad exchange. And, then we are enhancing those to incorporate checks and validation under the hood to work with the customers that we have. I can’t talk about the details of them since we can’t disclose - to those who would try to thwart – what they are, but we’re taking what we have and building it up.

Let's talk about cookies and cookie matching. On Right Media Exchange, RMX stores the advertisers ID in their RMX cookie, but as I understand it AdX 2.0 offers a unique hashed user ID for each cookie that the advertiser needs to store and track. Why did Google choose to go this route?

Spencer: We’re trying to be as sensitive as we can in terms of privacy. First of all, we prohibit buyers from using any PII or sensitive categories when they’re buying on the exchange. The approach that we’ve taken is basically to allow people to use their data, but we want to make sure there is no means for anything to happen with that.

Potentially, this (the DoubleClick Ad Exchange offering a unique, hashed user ID for each cookie that the advertiser needs to store and track) is going to put more work on the advertiser's side and it’s going to create some duplication [and inefficiencies] as they buy impressions across multiple, supply sources [if they don't manage the mapping of their cookies properly].

Doesn't [Google's unique, hashed user ID] break the universal cookie model that helps create efficiencies for advertisers and, ultimately, more frictionless advertising for the user which seems to speak to what Google, at its core, is about?

Spencer: We haven’t received feedback that it’s a challenge. We’ve gotten feedback that it really enables buyers and they’re comfortable with the protocols we have in place.

It seems to me there's an opportunity for a company to facilitate this matching and create the universal cookie - helps all parties, ultimately, including the user. Would you agree that the universal cookie ideally makes sense?

Spencer: We’re just trying to enable buyers to buy the way they would normally and enable them to use their own services and their own systems. And, the protocol, the real-time bidder we’ve developed, we’ve gotten great feedback. We’ve developed it in conjunction with our partners and they’re very happy with how way they’re able to do it. It seems to be a big efficiency gain for them and so we’re very happy with the feedback and, frankly, the usage we’re getting.

How does buying AdSense inventory on the exchange differ from buying it via AdWords? For example, is there a way that I can use AdSense's contextual matching to help target my exchange-side buying?

Spencer: The experience for AdWords buyers buying is exactly the same as it is today. The real benefit for AdWords buyers is they get access to more high quality inventory that we have available for the exchange. For exchange[-side] buyers, they’re typically bringing there own targeting with them so they can leverage what they have. We do provide high-level vertical targeting as one piece, but they have their own basic targeting. Any buying that is done on AdSense [from the exchange-side and non-AdWords] is going to be certified, so we’re not necessarily letting all the buyers come into AdSense inventory. They will be able to buy only if they’ve been certified by the Google AdSense team.

What I’m getting at here is AdSense has contextual matching technology and I’m wondering if that is going to be made available somehow through the exchange. Your point seems to be that you’re allowing advertisers to bring the data to the exchange and that could be, for example, contextual technology. Yes?

Spencer: That technology, the ability to target through keyword targeting through AdWords, is an AdWords feature. Other networks buying on the exchange have their own versions of things and can use their own targeting.

How critical is AdSense to the inventory supply on the exchange currently? Can you quantify it as a percentage of overall inventory?

Spencer: We don’t know how the inventory size is going to shake out now. I think what’s exciting here is that we’re doing the integration and enabling the AdSense inventory and AdSense buyers to come to the exchange. We don’t really know that distribution will look like.

What restrictions, if any, do bidders have when buying AdSense placements through the new DoubleClick Ad Exchange?

Spencer: Advertisers who come through AdWords are able to buy inventory on AdSense – obviously that’s what AdWords typically buys on. And they also will now have an opportunity to buy on inventory that we get from the exchange.

Ad networks coming on to the exchange must be certified in order to buy inventory from AdSense.

We’ve been very careful to give publishers lots of controls about how they manage their inventory. So, publishers participating in the ad exchange have the ability to decide which ad networks can purchase their inventory. And so, any given publisher can exclude any given buyer – and that’s up to them.

How does the revenue model work both on the publisher side and the advertiser side and, of course, what Google takes?

Spencer: Yes, sure. The model is a rev share with the publishers, and the networks are bidding on the inventory they want to buy. It’s a CPM-based auction so we don’t dictate any of the pricing.

In terms of Google’s transactional fee, is there a transactional fee for the advertiser? - I guess you’re taking a percentage of what the publisher gets?

Spencer: It’s very simple. The only thing is a rev share with the publisher.

For ad networks, can they buy and sell? - or are they just demand-side on The DoubleClick Ad Exchange?

Spencer: Depends on the network. Some networks can be publishers who represent inventory and they can work with the exchange as a seller. We allow them to rep inventory. What we don’t allow is chaining of inventory across [the exchange].

Spencer: It’s not really designed for them. We’re working and focusing with our partners who are the large publishers on the sell side and the ad networks on the buy side typically, and designing the system to integrate well with their own ad servers. So, customers that are using DART for publishers get that benefit of dynamic allocation which Neal and I mentioned earlier. And that’s really what we think makes this powerful for them – their ability to check whether or not that if they’re about to sell something for $10 that there’s a buyer that’s willing to spend $15 for it, that they’re able to capture that incremental yield.

Given a lack of sophistication around technology or resources for some advertisers, can they do retargeting on the exchange without using RTB?

Spencer: It depends on the ad network. The system is designed for ad networks as buyers, not for direct advertisers. Ad networks for varying sophistication will have different targeting – I can’t say really what targeting any given network has - we’re just trying to enable the technology and targeting ability that they do have.

Talking about what data you can bring into the exchange as an ad network, can you bring in data from providers on the exchange such as a BlueKai, Bizo or eXelate?

Spencer: We have prohibitions about buyers using PII or sensitive categories when they buy. Other than that, it’s their targeting that they’re using and that they’ve got. The publishers have controls about what data can be purchased from their inventory, so they can decide whether or not they’re going to enable remarketing or whatever it is. But, really it’s up to the network to be bringing their own targeting.

What can Google or DoubleClick do about helping to provide advertisers cross-platform attribution for its clients? For example, an advertiser will know if they will impact a conversion or end goal if they make a buy on TV AND in online display advertising through the exchange. Is Google looking to solve this?

Mohan: That’s a great question. We don’t have anything to announce on that today. You can imagine that we would love to deliver capabilities across channels, but we don’t have anything to talk about today in that regard.

Last question, the idea of a futures market or exchange. Can you see a futures exchange or reserved exchange developing in the future?

Spencer: We don’t have anything to say in that area. Who knows what the future will bring. [But], we don’t have anything we’re announcing on that.

Part I of our discussion with Neil Mohan and Scott Spencer is here which includes an overview from Neal Mohan on the new features of the exchange.

1 Comment

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